An Operations Manager's Staff Has Compiled the Information Below for Four

question 24

Essay

An operations manager's staff has compiled the information below for four manufacturing alternatives (A, B, C, and
D) that vary by production technology and the capacity of the machinery. All choices enable the same level of total production and have the same lifetime. The four states of nature represent four levels of consumer acceptance of the firm's products. Values in the table are net present value of future profits in millions of dollars.

a. Assuming a maximax strategy, which alternative would be chosen?
b. If maximin were used, which would be chosen?
c. If the states of nature were equally likely, which alternative should be chosen?

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Definitions:

Taxed

This pertains to the imposition of a financial charge or levy upon a taxpayer by a governmental organization.

Financial Managers

Professionals responsible for the financial health of an organization, overseeing investment activities and long-term financial planning.

Ethical Investors

Ethical investors focus on investing in companies that adhere to specific ethical or moral guidelines, such as environmental sustainability or social responsibility.

Net Profit

The actual profit after operating expenses, interest, taxes, and depreciation have been deducted from total revenues; it is the bottom line of the income statement.